Case for revisiting subsidies given to the renewable energy sector: Economic Survey 2018

NEW DELHI: The government may revisit incentives and subsidies for the renewable energy sector given the tariffs have been falling to almost match the levels of thermal power.

“There is a case for revisiting the subsidies and incentives being given to the renewable energy sector,” said the Economic Survey 2018, introduced in Parliament on Monday, 29th Jan, 2018. “Currently, the levelled tariff is approaching grid parity,” it said.

The industry is now bracing for an overhaul of incentives and subsidies, and some said this could impact their pricing

The government, so far, has played an active role in promoting adoption of renewable energy resources by offering various incentives such as generation-based incentives, capital and interest subsidies, viability gap funding, and concessional finance.

Renewable energy has been placed under priority sector lending and bank loan for solar rooftop systems is to be treated as a part of home loan/home improvement loan with subsequent tax benefits.

“The government has progressively tapering down the tax incentives in previous years and may discontinue it fully this year,” said Kameswara Rao, leader-energy, utilities and mining at PwC India. “Instead, it may channel incentives into new areas, such as offshore wind, electric vehicles, and energy storage,” he said.

India has set itself a target of achieving 175 GW of renewable energy capacity addition by 2022.

Currently, the ministry of new and renewable energy (MNRE) provides state-specific capital or tariff-based subsidies to solar rooftop systems, and exemption of ISTS transmission charges for inter-state sale of energy from wind and solar, among other incentives to the sector.

Currently, the ministry of new and renewable energy (MNRE) provides state-specific capital or tariff-based subsidies to solar rooftop systems, and exemption of ISTS transmission charges for inter-state sale of energy from wind and solar, among other incentives to the sector.

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